TIDMODX
RNS Number : 0193Z
Omega Diagnostics Group PLC
12 September 2022
OMEGA DIAGNOSTICS GROUP PLC
("Omega" or the "Company" or the "Group")
Preliminary Results
Omega (AIM: ODX), the specialist medical diagnostics company
focused on industry-leading Health and Nutrition products,
announces its audited results for the year ended 31 March 2022.
Financial highlights
-- Revenue increased by 25% to GBP8.5 million (2021: GBP6.8 million)
-- Gross margin increased to 59.7% (2021: 58.6%)
-- Operating loss (continuing operations) GBP0.9 million (2021: GBP0.5 million)
-- Loss from discontinued Global Health operations GBP9.9
million (2021: GBP2.5 million) including:
-- loss on disposal of Alva site GBP0.4 million
-- impairment loss recognised on the remeasurement of Global
Health assets to fair value less costs to sell GBP1.9 million
-- Adjusted EBITDA (continuing operations) GBP0.2 million (2021: GBP0.1 million)
-- Health and Nutrition division adjusted EBITDA GBP1.6 million (2021: GBP1.3 million)
Operational highlights
-- Strategy now focused exclusively on profitable and cash
generative Health and Nutrition products
-- New executive team of Jag Grewal (CEO) and Chris Lea (CFO)
-- Global Health division has been discontinued and disposed of
-- Withdrawal from COVID-19, following non-progression of the DHSC contract
-- Reduction in operating costs following the sale of the Alva site for GBP1.0 million
-- Disposal of the loss-making CD4 business for up to GBP6.3 million completed on 31 July 2022
-- Post year end equity fund raise of GBP2.2 million (gross)
-- Business now stabilised after the disruption caused by COVID-19
Commenting, Simon Douglas, Chairman, Omega Diagnostics said:
"Last year was an extremely challenging year, dominated by the
COVID-19 opportunity that ultimately did not come to fruition and
which destabilised the whole Group. The actions we have taken this
year to withdraw from the COVID-19 market, to dispose of the Alva
site to reduce losses and, subsequent to the year end, to complete
the disposal of the loss-making CD4 business, have left the Group
in a much stronger position. We currently have approximately GBP2.5
million in the bank and fully expect to receive the GBP4.0 million
CD4 deferred consideration later this year, which will be used to
accelerate our growth plans. Our existing Health and Nutrition
division is profitable and cash generative, with opportunities for
expansion both geographically and in terms of product range."
Contacts:
Omega Diagnostics Group PLC www.omegadx.com
Jag Grewal, Chief Executive Officer via Walbrook PR
Chris Lea, Chief Financial Officer
finnCap Ltd Tel: 020 7220 0500
Geoff Nash/Edward Whiley/George Dollemore
(Corporate Finance)
Alice Lane/ Harriet Ward (ECM)
Walbrook PR Limited Tel: 020 7933 8780 or omega@walbrookpr.com
Paul McManus / Lianne Applegarth Mob: 07980 541 893 / 07584
391 303
Sam Allen Mob: 07502 558 258
About Omega Diagnostics Group PLC
Omega manufactures and distributes high quality in-vitro
diagnostic products for use in hospitals, clinics, laboratories and
healthcare practitioners in over 70 countries and is now focused on
the health and nutrition sector.
www.omegadx.com
Chairman's statement
Focused on our future
Looking back over the last twelve months it has been one of
highs and lows. We have experienced challenges, with the Government
backed COVID-19 opportunity hitting many hurdles out of our
control, but we have demonstrated resilience from a trading
perspective, with a 41% increase in invoiced sales over the
previous year.
The Group has a new, talented management team who have reacted
quickly and decisively to many challenges presented to it and the
Board have now strategically re-aligned the Group to focus on the
highly successful and profitable Health and Nutrition business. The
lateral flow test manufacturing site in Alva, Scotland has been
successfully divested, together with its 93 staff, to Accubio
Limited, a wholly-owned subsidiary of Zhejiang Orient Gene Biotech
Co. Ltd (Orient Gene). This was the first step in our planned
strategy to reshape and restructure the business. The CD4 business
has also been sold to Accubio Limited for cash consideration of up
to GBP6.3 million.
Following the expected receipt of the deferred consideration of
GBP4.0 million from the CD4 business, we will be well financed and
will focus our efforts solely on our Health and Nutrition business,
which we believe has substantial opportunities in both China and
the US and is positioned for good growth and success in the coming
years. I would like to thank the Board for their commitment,
decisiveness and determination in difficult circumstances, when
seeking to maximise the value of the Company going forward.
Business performance
Outside of the COVID-19 opportunity, the Group had a strong
trading year in its core Health and Nutrition business, with a 25%
increase in revenue to GBP8.5 million for the year ended 31 March
2022 (2021: GBP6.8 million). The underlying performance was
significantly better due to sales in 2021 being skewed by a large
stocking order placed by the Group's largest partner in China to
seed the market in 2021. Excluding this order, underlying Health
and Nutrition sales grew by 54%, driven by strong FoodPrint(R)
product sales, up 84%.
The now discontinued Global Health division also saw substantial
growth in the period, up 97% to GBP3.8 million (2021: GBP1.9
million). CD4 revenues increased to GBP1.0 million (2021: GBP0.1
million), as further progress was made to implement CD4 testing in
high HIV prevalence countries and where demand from aid agencies
and non-governmental organisations continues to grow. This
performance helped secure a buyer for the business.
COVID-19 lateral flow tests
We came into the year on a very positive note, with the
Government having just announced that as part of its plans for
dealing with the COVID-19 pandemic, it had secured a number of
UK-based contracts, of which we were one, for the supply of rapid
COVID-19 antigen lateral flow tests to help prevent the virus from
spreading and to stop outbreaks from taking hold as restrictions
were carefully lifted. The intention was that as soon as the
Department of Health and Social Care (DHSC) had sourced and had
access to a test that had successfully passed a performance
evaluation, the test would be licensed for Omega to manufacture. As
part of the contract the DHSC provided funds to help expand our
Alva manufacturing site, which we duly delivered on. However,
although Omega was in regular dialogue with the DHSC, progress was
slow, and the DHSC ultimately failed to license a third-party
developed test to transfer to Omega's Alva site for manufacture.
Eventually they allowed the contract to expire, which
understandably had a negative and detrimental effect on our share
price and on shareholder value.
As a result, we were left with insufficient demand and a
significant manufacturing cost-base in Alva that was accordingly
not sustainable. The Alva site generated a GBP4.9 million loss in
the nine months to 31 December 2021. As part of a strategic review
the Board decided to substantially reduce costs through the
divestment of its Alva manufacturing site, to improve operational
efficiency and to focus on our two growth opportunities, the Health
and Nutrition business and our VISITECT(R) CD4 business.
As announced on 10 December 2021, the Group is in dispute with
the DHSC regarding the potential repayment of a pre-production
payment of GBP2.5 million (net of VAT). The Board of Omega, having
taken legal advice, does not believe that the Group is required to
repay the pre-production payment and that it is entitled to recover
additional losses incurred under the contract. However, we
acknowledge that there is a risk that a repayment of some or all of
this amount may be required, the timing and quantum of which is
uncertain.
CD4
Our strategy to drive further growth was to relocate CD4 test
production to Ely, Cambridgeshire, and focus on the profitable and
growing Health and Nutrition business, but this required additional
working capital. The Company sought to raise growth capital of up
to GBP7.0 million to achieve these goals but following the
shareholder vote against the resolutions necessary to proceed with
the proposals, the placing, subscription and open offer did not
take place.
With the Group not funded to pursue its fully integrated growth
strategy comprising both the CD4 business, which manufactures and
supplies VISITECT(R) CD4 and VISITECT(R) CD4 Advanced Disease tests
and the Health and Nutrition division, the Board quickly reassessed
the strategy for the forthcoming financial year, reflecting on
alternative options for funding growth for the Group.
Post year end
The conclusion of this strategic review was a decision taken in
March 2022, to divest the CD4 business and to focus solely on our
fast-growing Health and Nutrition business, which as a standalone
business is profitable, contributed the majority of Group revenues,
and is one where the Directors believe there to be substantial
growth opportunities.
On 3 August 2022, we announced that, having run a thorough
process and receiving a number of indicative offers, the Group
concluded the sale of the CD4 business to Accubio Limited on 31
July 2022 for a maximum cash consideration of GBP5.3 million plus a
4% royalty payment over the period to 31 December 2026, capped at
GBP1 million in aggregate. Although we are confident of a positive
outcome from the trial and the receipt of the full amount of the
deferred consideration, the precise timing and quantum of the
deferred consideration which will be received is uncertain.
The Board will now focus Omega's efforts solely on its Health
and Nutrition business, maintaining its leadership position and
targeting significant organic growth through embracing digital
technologies and related marketing activities.
Board and employees
This year has seen a refreshed Board with many changes, creating
an experienced board to work together on the next phase of Omega's
future, focused on the Health and Nutrition business.
The summer saw Kieron Harbinson, Group Finance Director, step
down from his position after 19 years' invaluable contribution.
Bill Rhodes, our previous Chairman and Non-Executive Director also
stepped down from the Board in February 2022 and the Board would
like to thank both Kieron and Bill for their many years of service.
Towards the end of the financial year Colin King stepped down as
the CEO and o n behalf of the Board I would like to offer our
sincere thanks for his contribution to the Group over many years
and to wish him well for the future .
Omega welcomed the appointment of Jag Grewal to the position of
CEO in January 2022. Jag has been a member of the Omega Board for
over ten years and has over 25 years' commercial experience in the
field of in vitro diagnostics and specifically in our Health and
Nutrition division, where he was Managing Director. In August 2021,
we were pleased to announce the appointment of Chris Lea, ACA, as
Chief Financial Officer, someone who has extensive public company
and private equity board level experience, gained within
multi-national, high growth and turnaround environments.
While the COVID-19 pandemic has become better controlled,
primarily through a successful vaccination programme, it still
remains with us, and we still continue to take precautions where
possible. We have also seen many structural changes within the
Group and I would like to thank all of our staff for their
commitment and dedication for continuing to deliver both products
and services throughout the year. For those who are no longer
employees of Omega, I wish them all the success for the future
under the new ownership.
Outlook
Last year was an extremely challenging year, dominated by the
COVID-19 opportunity that ultimately did not come to fruition and
which destabilised the whole Group. The actions we have taken this
year to withdraw from the COVID-19 market, to dispose of the Alva
site to reduce losses and, subsequent to the year end, to complete
the disposal of the loss-making CD4 business have left the Group in
a much stronger position. We currently have approximately GBP2.5
million in the bank and fully expect to receive the GBP4.0 million
CD4 deferred consideration later this year, which will be used to
accelerate our growth plans. Our existing Health and Nutrition
division is profitable and cash generative, with opportunities for
expansion both geographically and in terms of product range.
Despite inflationary headwinds, the Group's Health and Nutrition
markets continue to grow, although as a consequence of China's zero
tolerance approach to COVID-19, market adoption of our food
sensitivity products in China will be slower than previously
envisaged. With a number of product re-registrations being in
process following a significant technical product change undertaken
in May 2022, and variability in the ordering profile of many of the
Group's distributors, including those in China, revenues are
expected to be weighted towards the second half of the current
financial year. Planned investments to increase capacity, broaden
the product range and the establishment of a US presence will be
dependent on receiving the CD4 deferred consideration and will
increase operating expenses this year, with the Group targeting
EBITDA break even for its continuing activities and the benefit of
those investments expected to be realised in the following
financial year, when we expect to be both profitable and cash
generative.
Simon Douglas
Chairman
Chief Executive's review
A clear focus on Health and Nutrition
Introduction
To suggest the past financial year has been tumultuous is
probably an understatement and I echo the Chairman's comments of it
being a year of highs and lows. Whilst our underlying established
business units grew strongly over prior year, much of the focus and
excitement was obviously centred around the potential for Omega to
step up and support the UK Government's response to the COVID-19
pandemic through increased levels of testing.
However, government policy and market conditions changed rapidly
throughout the period. The UK Government effectively decided not to
invest in parts of the UK industry and to source products from
abroad. This left Omega, along with several other domestic in vitro
diagnostic manufacturers, in a position where the scaled up of
resources and capacity were unviable and/or unsustainable.
When I stepped into the CEO role in January 2022, it was clear
that we had to act quickly to stem our losses, while creating a new
foundation for the future. This resulted in the sale of the Alva
site to Accubio Limited while we retained VISITECT(R) CD4
manufacturing capability there under a transitional services
agreement. We then sought to raise funds to assist the transfer of
CD4 manufacturing and to invest in key growth opportunities for
Health and Nutrition.
Following on from the placing, which shareholders voted against
at the general meeting held on 7 March 2022, the Board re-evaluated
the strategic options for the Group's CD4 business. The conclusion
of this strategic review was that in March 2022 the Board elected
to divest this business unit and to focus solely on its already
established, growing and profitable Health and Nutrition business,
which contributed the majority of Group revenues.
Core business review
Health and Nutrition
The Group offers products to test for food sensitivity, a
condition where there is a non-immediate adverse physiological
response to particular foods, as distinct to an allergic reaction
to food. The Food Detective(R) product is designed for use by
healthcare practitioners and is believed to be the world's only
established point-of-care food specific IgG test.
FoodPrint (R) is a microarray technology used by over 150
laboratories worldwide and offering significant benefits over
traditional plate-based ELISA tests. The Group also provides a
laboratory testing service from its UK base near Cambridge under
the CNS Lab brand, serving healthcare professionals and consumers
directly. The division's products have a widespread coverage and
brand reach in over 70 countries.
In the year ended 31 March 2022, Health and Nutrition revenues
were GBP8.5 million (2021: GBP6.8 million). Prior year sales were
skewed by a large stocking order worth approximately GBP1.2 million
placed by the Group's largest partner in China to seed the market
in 2021. Excluding this stocking order from prior year, I am
pleased to report that underlying Health and Nutrition sales grew
by 54%, driven by strong FoodPrint (R) product sales, up 84%. This
division remains the key area of strategic focus, with substantial
strategic growth opportunities in both China and the US, in
addition to organic growth driven by an increasing awareness of how
gut health impacts chronic inflammatory disease.
Growth during the period was driven by sales in North America,
Europe and the Middle East, with all markets demonstrating growth
other than China. Omega's team have worked incredibly hard to
educate consumers and drive awareness of nutritional therapy
through its Health and Nutrition Academy webinars. These webinars
have also focused on naturopathic therapies, functional medicine
and sports nutrition and the Board remains confident that this will
drive demand once markets fully open back up. Comparative sales
from China were skewed by a large stocking order placed the
previous year with Omega's partner utilising that inventory in 2021
to seed the market. Sales ramp up in China is taking a little
longer than expected due to local market conditions and the
challenges that face any company looking to introduce a relatively
new concept into the Chinese consumer market.
During the period, the Health and Nutrition team has begun
marketing in a number of new and significant European territories,
but the focus on future growth outside of China remains with the US
and, as international travel opens up, Omega's team have more
opportunities to engage with key partners in this market. In
readiness for a future growth, the Group still expects to relocate
the business to a new purpose-built facility in Ely which will
improve operational efficiencies and provide the additional
capacity required to support growth expectations.
Global Health (now discontinued)
The Global Health division also saw substantial revenue growth
in the period, up 97% to GBP3.8 million (2021: GBP1.9 million).
The VISITECT(R) CD4 products are disposable, lateral flow
point-of-care tests for determining CD4 levels in people living
with HIV. Omega believes VISITECT(R) CD4 is the only
instrument-free point-of-care established test in the market. Its
strengths include the fact there is no requirement for refrigerated
storage and relative to other CD4 tests that require an
accompanying desktop instrument, it is affordable and easy to
use.
Omega recorded CD4 sales of GBP1.0 million ( 2021:
GBP0.1million) and was encouraged by the progress being made to
implement CD4 testing in high HIV prevalence countries and the
demand experienced from aid agencies and non-governmental
organisations continued to grow . At the end of March 2022 Omega
had confirmed orders worth over GBP1.1 million which were expected
to be delivered in the year ending 31 March 2023, and the Group had
an encouraging sales pipeline.
However, following on from the placing, which shareholders voted
against, the Board had to re-evaluate the strategic options for the
CD4 business as the Group lacked the resources to fund the growth
in the business. Accordingly, the conclusion of the strategic
review in March 2022 was that the Board intended to divest the CD4
business and to focus solely on its already established and
profitable Health and Nutrition business. The Board considered that
the CD4 business was likely to be more successful under new
ownership, with an owner with a greater capacity to invest in
production capabilities and product development/improvement.
The sale of the CD4 business to Accubio Limited for up to GBP6.3
million was concluded on 31 July 2022, leaving the Group now
focused solely on the Health and Nutrition business.
The market for COVID-19 lateral flow tests changed dramatically
over the last twelve months. The anticipated volumes under the
Group's contract with the DHSC did not materialise and the contract
lapsed in late 2021. The Group had very limited success in gaining
the necessary product approvals in a timely fashion and during this
time, product pricing had reduced significantly, with a large
quantity of UK testing requirements being sourced from high volume
manufacturers in China. With the then surplus of products on the
market, selling prices became substantially below the Group's cost
of raw materials, thereby making Omega's COVID-19 business unit
unviable. COVID-19 related revenues contributed GBP2.6 million last
year (2020: GBP1.7 million); however, in light of these
circumstances, the Board took the decision to no longer pursue any
COVID-19 opportunities.
As announced on 10 December 2021, the Group is in dispute with
the DHSC regarding the potential repayment of a pre-production
payment of GBP2.5 million. The Board of Omega, having taken legal
advice, do not believe that the Group is required to repay the
pre-production payment and that it is entitled to recover
additional losses incurred under the contract. Discussions with the
DHSC remain ongoing. At the Group's request, the DHSC is making
arrangements to remove the government-funded equipment from the
Alva site.
Strategy
Going forward, the Board will now focus Omega's efforts solely
on its core Health and Nutrition business, maintaining its
leadership position and targeting significant organic growth
through embracing digital technologies and related marketing
activities. The Group's growth strategy in this segment will also
focus on geographic expansion in the USA, a health-conscious and
mature personal health and well-being market, as well as expansion
of the Group's current menu of tests available to healthcare
professionals, with the introduction of complementary tests,
allowing customers to more comprehensively manage their patients
and thus enabling the Board's vision of delivering personalised
nutrition for better health.
The US Food Sensitivity testing market is estimated to be the
largest and most established market in the world. It is the leading
market for functional medicine laboratory testing with an
increasing demand for personalised medicine. The Board believes the
best route to market would be to replicate the Group's CNS
Laboratory service direct to healthcare professionals and
ultimately direct to consumer. Omega differentiates itself from
established players by taking the Group's tried and tested market
leading approach with education and support, coupled with its
digital strategy, to engage and empower patients and healthcare
professionals. The total US market size is estimated by the
Directors to be $50-$100 million and the Board believes that
Omega's US revenues could potentially be between GBP3 million and
GBP6 million over the next three to five years.
In order to realise our vision of becoming a leader in
delivering diagnostics that provide a complete gut health
assessment, it is our intention to build a wider menu of
complementary gut health tests and to sell these through our
already well-established channels from a market leading position in
over 70 countries. Understanding the microbiome is the new frontier
of understanding chronic inflammatory conditions arising from poor
gut health. Over recent years the gut microbiome in particular has
been linked to a plethora of diseases and conditions, from diabetes
and anxiety to obesity and the Group has recently seen a growing
demand from its existing customer base in this segment.
In addition to the microbiome, it is also important to
understand the relationship between nutrients, diet, and gene
expression. Nutrigenomics allows the healthcare professional to
understand genetic strengths and weaknesses making specific
improvements that help achieve better health. Combining microbiome
and nutrigenomics with our existing IgG tests provide a compelling
value proposition that will offer true personalised nutritional
assessment and the Board believes that menu expansion has the
potential to generate material revenue growth over the medium term.
The Directors believe that menu expansion from microbiome and
nutrigenomics combined has the potential to increase revenues by
GBP2 million to GBP5 million over the next five years.
Summary and Outlook
After a tumultuous year, Omega has re-emerged as a more focused
and significantly better funded company, dedicated to delivering
personalised nutrition diagnostics. It was Thomas Edison who
memorably stated that "I have not failed. I've just found 10,000
ways that won't work". Learning lessons from the past will inform
and guide Omega's future. We will move away from strategies that
are built on new product development and targeting unfamiliar
market segments to those growing from an established leadership
position in an existing segment that has huge potential for growth.
New product development will be replaced by commercial and service
development utilising existing technologies that are underpinned by
a digital and educational strategy that will maintain our brand in
the marketplace. It has been proven time and time again across many
industries that those companies with a narrow focus and low level
of distraction are more likely to deliver on their vision.
We operate in an exciting market where it is increasingly being
recognised that improving gut health and avoiding food-driven
inflammation are key to achieving a healthy weight and maximising
your energy. As healthcare systems creak under the burden of
chronic disease and an aging population, society is increasingly
turning to prevention through wellness. Gut health is at the very
frontier of this change and we in turn sit at the heart of this
movement.
On a personal level, I was honoured to be asked to lead the
organisation in January 2022. I work with an extraordinary group of
talented individuals whose knowledge and know how form a key
cornerstone of our strategy within personalised nutrition. Over the
past few years, Colin led the organisation honourably over that
time and brought a lot of positive change to our business. I would
like to thank Colin for his support and mentorship over the years,
without which I would not be in a position to take the reins and
lead a company I love, in a healthcare market I am passionate
about.
Jag Grewal
Chief Executive Officer
Restructuring for growth
Financial review
The year has unfortunately been dominated by COVID-19 and the
expansion of the Alva site to facilitate the contract for the
manufacture of lateral flow tests for the DHSC which was awarded in
February 2021, together with dealing with the consequences arising
from the non-performance of that contract.
Following the award of the DHSC contract, the Group acted
swiftly and in good faith to increase the production capacity of
its Alva site to meet anticipated government demand. Funded
initially by advance payments of GBP2.5 million from the DHSC, the
Group rented additional floor space in Alva, re-configured the
manufacturing site, recruited and trained a significant number of
new employees and purchased the plant and machinery necessary to
deliver lateral flow tests at scale. The funding from the DHSC
covered the initial costs of expansion, up to and including July
2021, with this advance funding to be recovered by the DHSC at an
agreed amount per test produced.
Unfortunately, the anticipated volumes under the Group's
contract with the DHSC did not materialise, as the DHSC failed to
licence the necessary intellectual property to enable the Group to
commence manufacture. The DHSC did not advise the Group of its
failure to licence the necessary technology and instead, allowed
the contract to lapse in late 2021. The Board considers that the
DHSC should have notified the Group that the contract could not be
fulfilled and invoked the termination clauses within the contract,
which would have allowed the Group to recover additional losses
incurred in relation to redundancy costs, the sale of assets and
contract break costs.
Dispute with the DHSC
As announced on 10 December 2021, the Group is in dispute with
the DHSC regarding the potential repayment of a pre-production
payment of GBP2.5 million (net of VAT). The Board of Omega, having
taken legal advice, does not believe that the Group is required to
repay the pre-production payment and that it is entitled to recover
additional losses incurred under the contract. Discussions with the
DHSC are ongoing. The legal costs associated with the dispute have
been expensed and, with no production volume over which the
pre-production payment can be recovered as envisaged in the
contract, the Group still retains a deferred income balance of
GBP2.5 million pending resolution of the dispute.
Alongside the DHSC contract, the Group sought to develop its own
COVID-19 lateral flow test for manufacture and sale, although the
DHSC contract was not dependent on a test developed by Omega.
Regrettably, the Group had very limited success in gaining the
necessary COVID-19 product approvals in a timely fashion and during
this time product pricing had reduced significantly, with a large
quantity of UK testing requirements being sourced from high volume
manufacturers in China. With a surplus of products on the market,
selling prices fell substantially below the Group's cost of raw
materials therefore making Omega's COVID-19 business unit unviable.
In light of these circumstances, the Board decided to cease
pursuing any COVID-19 opportunities.
On 4 March 2022, the Group requested the DHSC make arrangements
to remove the government-funded equipment from the Alva site. To
date, much of the government-funded equipment remains on the Alva
site, which is no longer owned or occupied by Omega.
Following the sale of the Alva site and the sale of Omega's CD4
business to Accubio on 7 March and 31 July 2022 respectively, the
Group is now in a better position to quantify the additional costs
suffered as a result of the DHSC's actions and expects to pursue
the recovery of these incremental costs from the DHSC. The
financial statements do not however, assume any recovery of such
costs.
Sale of the loss-making Alva site while protecting jobs
The expansion of the Alva site in anticipation of government
demand which did not materialise, coupled with a modest, but
growing demand for CD4 tests, gave rise to a manufacturing facility
with a high level of fixed costs, including regulatory and quality
assurance costs disproportionate to activity levels, and
insufficient revenue. The Alva site was losing circa GBP0.5 million
per month and with finite cash resources available, put the future
of the entire Group at risk. It was readily apparent that swift
action needed to be taken to substantially reduce the Alva cost
base. During discussions with Orient Gene regarding sub-contract
manufacture of COVID-19 lateral flow tests, it became apparent that
Orient Gene were seeking a UK manufacturing site with lateral flow
expertise. A sale of the Alva site to Orient Gene, through their
wholly owned UK subsidiary company, Accubio Limited, would allow
the Group to assign the remaining 14 years of the lease, transfer
93 employees to Accubio thereby avoiding any redundancy costs and
to dispose of certain fixed assets for value. The Group also
negotiated the right to occupy part of the Alva site until 31
December 2022 and to purchase manufacturing and administrative
services from Accubio, enabling CD4 manufacturing to continue until
such time as it could be relocated to the Group's planned new site
in Ely. The disposal of the Alva site was completed on 7 March
2022, with the Group receiving cash proceeds of GBP1.0 million.
Placing and an open offer/direct subscription
At the same time as the announcement of the Alva site sale, the
Group had contracted with a number of placees to raise GBP5.0
million at a share price of 5.0 pence, with the additional funding
facilitating the planned relocation of the CD4 business to Ely, as
well as financing investments in the Health and Nutrition division
and providing additional working capital for the Group. The Board
however failed to convince shareholders of the need to raise funds
for this purpose at the general meeting on 7 March 2022 and the
placing did not proceed. As a consequence, the Group was no longer
capable of funding the relocation of its CD4 business and instead,
immediately sought to divest itself of this loss-making business
unit. Still requiring additional funding to finance the CD4
business through to an eventual sale, the Company undertook a
placing in May 2022 and an open offer/direct subscription in June
2022 which raised GBP2.0 million and GBP0.2 million respectively,
at a price of 4.0 pence, with the placees requiring warrants over a
further 90 million shares at an exercise price of 4.0 pence.
Disposal/sale of CD4 business
Following the decision to divest the CD4 business, the Group
completed the disposal to Accubio on 31 July 2022. Under the terms
of this agreement, the Group received an immediate cash payment of
GBP0.5 million for fixed assets and GBP0.9 million for inventory on
hand at completion. Furthermore, the Group expects to receive an
additional GBP4.0 million contingent on the successful outcome of
an ongoing final clinical study in Kenya which is expected to
conclude in the autumn and will receive a royalty of 4% of
Accubio's future CD4 revenues for the period to 31 December 2026,
capped at GBP1.0 million in aggregate.
The decisions to divest the CD4 business and to withdraw from
the COVID-19 market resulted in the recognition an impairment of
GBP1.9 million on the remeasurement of asset values to fair value,
less costs to sell, as well as an impairment of inventory of GBP0.7
million.
With the withdrawal from COVID-19 having been announced in
March, and the decision, also in March, to divest the CD4 business,
the Group no longer operates in the Global Health market as
previously reported. As such, the Global Health division has been
treated as a discontinued operation, with the CD4 assets and any
associated research and development assets being written down to
their recoverable amount and reclassified as assets held for sale
as at 31 March 2022. This now leaves the Group solely focussed on
its profitable and cash generative Health and Nutrition division
going forward.
Following the sale, the Group were left with surplus plant and
equipment with a net book value of GBP0.7 million, the majority of
which relate to the COVID-19 business and which were purchased as
part of the site expansion for the DHSC contract. These assets were
offered to potential purchasers of the CD4 business and as such
have been classified as assets held for sale at 31 March 2022.
These non-CD4 assets have been written down to an estimated
recoverable amount of GBP0.1 million.
Financial results summary - continuing operations
For the year ended 31 March 2022, the Group reported revenue of
GBP8.5 million (2021: GBP6.8 million), an EBITDA loss of GBP0.4
million (2021: EBITDA loss of GBP0.1 million), an adjusted EBITDA
of GBP0.2 million (2021: GBP0.1 million), and a statutory loss
before tax of GBP1.0 million (2021: GBP0.5 million).
Health
and Nutrition Corporate Total
2022 GBP'000 GBP'000 GBP'000
------------------------------- --------------- ---------- --------
Sales 8,539 - 8,539
Operating profit/(loss)
after exceptional costs 965 (1,894) (929)
Add back:
Depreciation and amortisation 547 - 547
EBITDA 1,512 (1,894) (382)
Share based payment charge 58 158 216
Compensation for loss
of office - 287 287
Aborted placing costs - 50 50
--------------------------------- --------------- ---------- --------
Adjusted
EBITDA 1,570 (1,399) 171
Statutory profit/(loss)
before taxation 944 (1,894) (950)
--------------------------------- --------------- ---------- --------
Health
and Nutrition Corporate Total
2021 GBP'000 GBP'000 GBP'000
------------------------------- --------------- ---------- --------
Sales 6,816 - 6,816
Operating profit/(loss)
after exceptional costs 906 (1,374) (468)
Add back:
Depreciation and amortisation 357 - 357
EBITDA 1,263 (1,374) (111)
Share based payment charge 72 131 203
Exceptional
costs - - -
------------------------------- --------------- ---------- --------
Adjusted
EBITDA 1,335 (1,243) 92
Statutory profit/(loss)
before taxation 856 (1,402) (546)
--------------------------------- --------------- ---------- --------
Health and Nutrition revenue increased by 25% to GBP8.5 million
(2021: GBP6.8 million), as markets opened up following the easing
of COVID-19 restrictions. Prior year sales are skewed by a large
stocking order worth approximately GBP1.2m placed by the Group's
largest partner in China to seed the market in 2021. Excluding this
stocking order from last year, underlying sales grew by 54%, driven
by strong Food Print(R) product sales, up 84%. This remains one of
the key areas of strategic focus, with substantial growth
opportunities in both China and the US.
A summary of Health and Nutrition revenue is in the table
below:
2022 2021 inc/(dec)
GBP'000 GBP'000 %
-------- -------- ----------
FoodPrint (R) 6,102 3,325 84%
Food Detective (R) 1,614 2,525 (36)%
CNS laboratory service 484 430 13%
Food ELISA/other 339 536 (37)%
-------- -------- ----------
8,539 6,816 25%
-------- -------- ----------
The gross profit margin percentage has increased to 59.7% (2021:
58.6%) which has benefitted from the growth in the higher margin
FoodPrint(R) sales, the Group's highest margin product.
Excluding exceptional costs, administrative overheads on
continuing operations increased by GBP0.8 million to GBP4.4 million
(2021: GBP3.6 million). Research and development and regulatory
affairs resources have been focused on compliance with the new In
Vitro Medical Device Regulations (EU) 2017/746, which were due to
be implemented in May 2022 but have subsequently been delayed to
2027 and directed more towards product improvement rather than
development and have therefore been expensed rather than being
capitalised. In contrast to the prior year, the year ended 31 March
2022 includes a full year amortisation charge for two specific
research and development projects, Salary costs include an increase
in temporary staff to support growth, together with a return to the
full expense following the end of the Job Retention Scheme.
Selling and marketing costs have increased by GBP0.3 million to
GBP1.3 million (2021: GBP1.0 million) due to the implementation of
the new corporate branding, increased headcount and a return to
tradeshows and international travel after the COVID-19
pandemic.
Exceptional items
During the year, the Group incurred exceptional costs on
continuing operations of GBP0.3 million. The costs incurred related
to the settlement associated with the outgoing Chief Executive and
the legal costs associated with the aborted placing.
Financial results summary - discontinued operations
As a consequence of the decision taken in March 2022 to dispose
of the CD4 business, the Global Health division, which also
included the COVID-19 business, has been treated as a discontinued
operation, with the COVID-19 assets, CD4 assets and any associated
research and development assets being written down to their
recoverable amount and reclassified as assets held for sale as at
31 March 2022.
2022 2021
GBP'000 GBP'000
Sales 3,789 1,919
Operating loss after exceptional
costs (7,476) (2,853)
Impairment on the remeasurement
of asset values (1,915) -
Depreciation and amortisation 742 528
------------------------------------------------------------- ----------------- ---------
EBITDA (8,649) (2,325)
Share based payment charge 6 6 67
Exceptional costs 1,028 -
Impairment on the remeasurement of asset values 1,915 -
------------------------------------------------------------------ ------------ ---------
Adjusted EBITDA (5,640) ( 2,258)
------------------------------------------------------------- ----------------- ---------
Loss before taxation (9, 550) (2,993)
------------------------------------------------------------- ----------------- ---------
Revenue from Global Health increased to GBP3.8 million (2021:
GBP1.9 million), principally due to the activities undertaken with
COVID-19 testing. The largest portion of revenue was derived from
manufacturing COVID-19 lateral flow antibody tests on behalf of the
UK-Rapid Test Consortium, followed by sub-contracting activities
undertaken on behalf of third parties.
Omega also shipped 309,000 VISITECT(R) CD4 Advanced Disease
tests (2021: 37,000 tests) generating a revenue of GBP1.0 million
(2021: GBP0.1 million), including sales through the Clinton Health
Access Initiative supply agreement into countries including
Nigeria, Uganda, Mozambique and Zimbabwe.
2022 2021 inc/(dec)
GBP'000 GBP'000 %
-------------------- -------- -------- -----------
VISITECT CD4 968 111 772%
C OVID-19 2,596 1,668 56%
Allergy/autoimmune 87 73 19%
Other 138 67 106%
-------------------- -------- -------- -----------
3,789 1,919 97%
-------------------- -------- -------- -----------
The exceptional costs associated with the discontinued Global
Health division are as follows:
2022 2021
GBP'000 GBP'000
-------------------------------------- ------- -------
Loss on disposal of the Alva site
(after costs) (399) -
Gain on disposal of Alva lease 158 -
Impairment of Global Health inventory (723) -
Bad debt expense (190) -
Reduction in Omega Diagnostics GmbH
settlement* 126 -
-------------------------------------- ------- -------
(1,028) -
-------------------------------------- ------- -------
The loss on disposal of the Alva site includes the sale of
tangible fixed assets at a loss of GBP0.2 million, transaction
costs of GBP0.1 million and other costs of GBP0.1 million. In
addition, the Group made a net gain of GBP0.2 million when
disposing of the Alva property lease.
All COVID-19 inventory was fully impaired at 31 March 2022 and
CD4 inventory has been written down to net realisable value in line
with the terms of the CD4 sale and purchase agreement, resulting in
an aggregate impairment charge of GBP0.7 million.
The bad debt expense of GBP0.2 million includes a provision for
the potential repayment which may arise if Abingdon Health are
unsuccessful in resolving their ongoing dispute with the DHSC.
The insolvency claim relating to Omega Diagnostics GmbH was
settled during the year for GBP0.3 million, GBP0.1 million lower
than had been provided for in prior periods.
Assets held for sale
At 31 March 2022, the Global Health assets of GBP5.0 million and
liabilities of GBP0.5 million were reclassified as held for sale.
These assets and liabilities included CD4 assets and liabilities
and non-CD4 assets and liabilities.
Following the withdrawal from the COVID-19 market and disposals
of the Alva manufacturing site and the CD4 business, the Group also
has a number of surplus assets which are no longer required to
support its operations. These non-CD4 assets are primarily plant
and equipment purchased in anticipation of COVID-19 lateral flow
test production.
The Group has recognised an impairment loss of GBP1.9 million on
the remeasurement of the CD4 and non-CD4 assets to their fair
value, less costs to sell. This amount includes assumptions on the
fair value of deferred consideration and future royalty income to
be received by the Group following the sale of the CD4
business.
Adjusted EBITDA
The continuing Group continues to consider EBITDA and adjusted
EBITDA as being more appropriate measures of profitability which
are better aligned with the cash generating activities of the
business. Whilst the Group made an EBITDA loss of GBP9.0 million
(2021: GBP2.4 million), the continuing Group generated an EBITDA
loss in the year of GBP0.4 million (2021: GBP0.1 million). The
adjusted EBITDA (before exceptional costs, share based payment
charges and the impairment loss recognised on the remeasurement to
fair value of assets held for sale, less costs to sell) is GBP0.2
million (2021: GBP0.1 million).
2022 2021
Continuing Discontinued Continuing Discontinued
operations operations Total operations operations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ----------- ------------ ------- ----------- ------------ -------
Operating loss after
exceptional costs (929) (7,476) (8,405) (468) (2,853) (3,321)
Impairment on the remeasurement
of asset values - (1,915) (1,915) - - -
Depreciation and amortisation 547 742 1,289 357 528 885
-------------------------------- ----------- ------------ ------- ----------- ------------ -------
EBITDA (382) (8,649) (9,031) (111) (2,325) (2,436)
Exceptional costs 337 1,028 1,365 - - -
Impairment on the remeasurement
of asset values - 1,915 1,915 - - -
Share based payment
charge 216 66 282 203 67 270
-------------------------------- ----------- ------------ ------- ----------- ------------ -------
Adjusted EBITDA 171 (5,640) (5,469) 92 (2,258) (2,166)
-------------------------------- ----------- ------------ ------- ----------- ------------ -------
The standalone Health and Nutrition business remains profitable,
with an adjusted EBITDA of GBP1.6 million (2021: GBP1.3
million).
After the loss arising from discontinued activities of GBP9.9
million (2021: GBP2.5 million), the Group has recorded a loss after
tax of GBP11.3 million (2021: GBP2.1 million).
Taxation
The current year tax charge of GBP0.5 million arises
predominantly from a reassessment of the recoverability of the tax
losses of GBP19.5 million as at 31 March 2022. Other than to offset
any deferred tax liabilities which may crystallise in the future,
based on the Group's trading assumptions the deferred tax asset in
respect of trading losses will begin being realised from 2024
onwards, when the Group starts to generate taxable profits. The
deferred tax asset has been valued based upon a future UK
Corporation tax of 19%, increasing to 25% from 1 April 2023.
Loss per share
The loss per share was 6.2 pence (2021: 1.2 pence) based on a
statutory loss after tax of GBP11.3 million (2021: loss of GBP2.1
million). The basic loss per share for continuing operations was
0.9 pence (2021: earnings per share 0.2 pence). The adjusted loss
per share was 4.2 pence (2021: 1.0 pence). The adjusted loss after
tax was GBP7.7 million (2021: loss of GBP1.7 million) and the loss
per share is calculated on the basic average of 182.6 million
shares (2021: 171.7 million shares) in issue. The adjusted loss per
share on continuing operations was 0.4 pence (2021: earnings per
share of 0.4 pence).
Research and development
During the year, the Group invested a total of GBP0.4 million in
all development activities associated with continuing operations, a
reduction of GBP0.1 million from the prior year (2021: GBP0.5
million), representing 5.1% (2021: 6.9%) of revenue. Of the total
expenditure, GBP0.1 million (2021: GBP0.3 million) has been
capitalised in accordance with IAS 38 - Development Costs, whilst
earlier stage expenditure and expenditure not qualifying in
accordance with IAS 38 criteria of GBP0.5 million (2021: GBP0.6
million) has been expensed through the income statement. The
capitalised expenditure incurred all related to the development of
the digital platform.
Research and development expenditure on the now discontinued
Global Health division totalled GBP0.8 million during the year
(2021: GBP1.0 million). Capitalised expenditure reduced by GBP0.1
million to GBP0.5 million (2021: GBP0.6 million) with the remaining
GBP0.3 million expensed to the income statement (2021: GBP0.4
million).
Property, plant and equipment
Total expenditure on property, plant and equipment in the year
was GBP1.0 million (2021: GBP2.0 million). Additions of GBP0.4
million were incurred on leasehold improvements in relation to the
Alva site and these have been disposed of following the sale of the
site early in 2022.
Following the sale of the Alva site, the Group recognised a net
gain on the disposal of the Alva lease of GBP0.2 million.
As at 31 March 2022, the outstanding liabilities in connection
with leases recognised under IFRS16 includes short-term liabilities
of GBP0.1 million (2021: GBP0.2 million) and long-term liabilities
of GBP0.02 million (2021: GBP2.0 million).
Financing and going concern
In determining the appropriate basis of preparation of the
financial statements, the Directors are required to consider
whether the Company and Group can continue in operational existence
through a period of at least 12 months from the date of approving
the financial statements (the going concern period). The Directors
have determined that the going concern period for purposes of these
financial statements is the period through to 30 September 2023.
The Group realised a loss of GBP11.3 million for the year ended 31
March 2022 (2021: loss of GBP2.1 million). As at 31 March 2022, the
Group had net current assets of GBP2.8 million, including a cash
balance of GBP1.6 million and additionally had a overdraft facility
of GBP2.0 million, which was undrawn. Subsequent to the year end,
the overdraft facility was extended to 30 September 2022 on
existing terms but following the sale of the CD4 business in July,
Bank of Scotland have subsequently indicated it will not be renewed
beyond this date. At the date of finalising these financial
statements, the Group has cash in bank of GBP2.5 million.
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Strategic Report. The financial position of the
Group, its cash flows, liquidity position and borrowing facilities
are described in the Financial Review.
In May and June 2022, the Group raised GBP2.2 million from
shareholders through a placing and open offer/direct subscription,
in order to finance the loss-making CD4 business through to
eventual disposal. The sale of the CD4 business was concluded on 31
July 2022, with the Group subsequently receiving a cash payment of
GBP0.5 million for the sale of fixed assets and a further GBP0.9
million for inventory on hand. A further GBP4.0 million is expected
to be received, contingent on the successful outcome of an ongoing
clinical study in Kenya which is expected to conclude in the final
quarter of this calendar year. Royalty fees of 4% of Accubio's
future CD4 revenues for the period to 31 December 2026 would also
be due to be received, up to GBP1.0 million in aggregate.
The Directors have prepared trading and cash flow base case
forecasts to 30 September 2023, taking into account the full
anticipated proceeds from the sale of the CD4 business and have
applied severe downside sensitivities and reverse stress tests to
the base case forecasts. The sensitivities and stress tests have
been applied to take account of the impact of potential uncertain
outcomes that are, to an extent, outside of management's control,
as well as reduced trading forecasts, taking into account current
macro-economic conditions. These scenarios include:
-- Not receiving any of the deferred consideration of GBP4.0
million arising from the sale of the CD4 business. This would
require the VISITECT(R) CD4 test to fail to meet the agreed levels
of sensitivity and specificity, the Group's response to the points
raised in the study report to be dismissed and the World Health
Organisation to officially de-list the product, removing it from
the market entirely. The Directors consider that this final step
will not be taken lightly as the test is unique. Should the product
be de-listed, an evaluation of the time and costs associated with
any remedial action is to be agreed between the Group and Accubio
Limited, with the costs of any such action to be met from the
deferred consideration held in escrow, subject to a maximum cap of
GBP4.0 million. There is therefore a range of potential outcomes
arising from the Kenyan trial, ranging from a cash receipt of
GBP4.0 million to GBPnil, and the timing and quantum is, to an
extent, outside of management's control.
-- Reduction in forecast revenue to GBP8.5 million per annum, in
line with the year ended 31 March 2022, together with a 2%
reduction in gross margin to 58%.
-- After factoring the impact of the above sensitivities, the
Directors considered certain discretionary cost mitigation measures
which could be taken, including eliminating any new headcount,
delaying the planned investments in product menu expansion and in
establishing a US presence, further delaying the start of the lease
for the new Ely premises and seeking recovery of liquidated damages
in cash or through the benefit of a rent-free period. The severe
downside forecast takes account of all of these mitigating actions
that could be taken as needed, but does not include any new debt
finance facilities which may be available to the Group. The
Directors consider these mitigating actions to be under their
direct control.
-- After taking into account the above sensitivities and
mitigating actions, the reverse stress test indicates revenue could
fall by a further 38% and a gross margin could deteriorate by an
additional 2% before forecast cash resources are exhausted.
After taking legal advice and making an assessment of the terms
and conditions contained within the contract with the DHSC, the
Directors do not believe the Group will be required to repay the
pre-production payment of GBP2.5 million. In addition, the
Directors consider there to be grounds to claim for damages for
additional losses incurred under the contract. As such, the
Directors believe there is a reasonable prospect that no cash
outflow in the form of a repayment to the DHSC and repayment is not
included in the base case or as a sensitivity. However, the
Director's acknowledge that there is a risk that a repayment of
some or all of this amount may be required, the timing and quantum
of which is uncertain.
The receipt of the CD4 sale proceeds of GBP4.0 million is
dependent on the outcome of an ongoing, independent clinical study.
Although the Directors are confident of a positive outcome from the
trial and the receipt of the full amount of the deferred
consideration, the precise timing and quantum is uncertain.
The Directors acknowledge there is an element of uncertainty
within the going concern period attaching to the outcome of the
DHSC dispute and the receipt of the CD4 deferred consideration. If
both outstanding matters went against the Group to the maximum
extent of GBP6.5 million, this may exhaust the available liquidity
of the Company and Group and represents a material uncertainty
which may cast significant doubt on the Company and Group's ability
to continue as a going concern. Notwithstanding this material
uncertainty, on the basis of the legal advice received in relation
to the DHSC dispute, and our assessment that the conditions
precedent prior to release of the CD4 contingent consideration will
be achieved, the Board has a reasonable expectation that the
Company and Group have adequate resources to continue in
operational existence for the period to 30 September 2023. On this
basis, the Directors continue to adopt the going concern basis of
preparation. Accordingly, these financial statements do not include
the adjustments that would be required if the Company and Group was
unable to continue as a going concern.
Events since the balance sheet date
On 6 May 2022 the Company announced that it has raised gross
proceeds of GBP2.0 million via a placing of 50,000,000 new ordinary
shares of 4.0 pence each and 90,000,000 warrants to subscribe for
ordinary shares (warrants) to institutional investors at an issue
price of 4.0 pence per share. The placing was undertaken by means
of a non pre-emptive cashbox placing. Subscribers to the placing
were issued warrants to subscribe for one additional ordinary share
at 4.0 pence, in the ratio of nine warrants for every five placing
shares issued to those subscribers.
In addition to the placing, on 8 June 2022 the Company issued
2,877,776 new ordinary shares by direct subscription, received
valid acceptances from qualifying shareholders in respect of their
basic entitlements under an open offer in respect of 1,560,453 new
ordinary shares and received applications from qualifying
shareholders under the excess application facility in respect of
1,317,323 new ordinary shares. In aggregate this totalled 2,877,776
new ordinary shares. Furthermore, the Directors subscribed for an
additional 2,125,000 shares. Accordingly, a total of 5,002,776 new
ordinary shares were issued at 4.0 pence, bringing additional gross
proceeds of GBP0.2 million before expenses.
On 8 and 9 June 2022 the Company issued share awards to
directors and senior managers under a new, long term incentive plan
which targets an increase in the share price to 12.0 pence over the
next three years. As part of these awards, all existing share
options held by Simon Douglas and Jag Grewal were relinquished.
On 10 July 2022, the Group received a payment of GBP0.7 million
from Abingdon Health plc (Abingdon) in relation to the manufacture
and supply of AbC-19(TM) Rapid tests, a C OVID -19 lateral flow
antibody test. The payment was due under the Supply of Goods
contract announced on 19 October 2020 and was made following
confirmation from Abingdon that a cash payment had been received
from the DHSC on 7 July 2022, as part of a settlement agreement
relating to outstanding invoices due from the DHSC to Abingdon. The
Group may be required to repay GBP0.2 million of this amount
dependent upon the final outcome of the ongoing dispute between
Abingdon and the DHSC.
On 31 July 2022, the Group completed the disposal of its CD4
business to Accubio. Under the terms of this agreement, the Group
received an immediate cash payment of GBP0.5 million for fixed
assets and GBP0.9 million for inventory on hand at completion.
Furthermore, the Group expects to receive an additional GBP4.0
million contingent on the successful outcome of an ongoing final
clinical study in Kenya and which is expected to conclude in the
autumn and will receive a royalty of 4% of Accubio's future CD4
revenues for the period to 31 December 2026, capped at GBP1.0
million in aggregate. The VISITECT(R) CD4 test is already fully
commercialised, being distributed in 29 countries and the
performance of the test has previously been independently verified
in several external clinical studies. Accordingly, the Board is
confident as to the outcome of the clinical study in Kenya.
Chris Lea
Chief Financial Officer
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2022
2022 2021
Note GBP'000 GBP'000
------------------------------------------------------ ---- -------- -------
Continuing operations
Revenue 4 8,539 6,816
Cost of sales (3,437) (2,820)
------------------------------------------------------ ---- -------- -------
Gross profit 5,102 3,996
Administration costs (4,438) (3,638)
Selling and marketing costs (1,256) (980)
Other income - 154
------------------------------------------------------ ---- -------- -------
Operating loss before
exceptional items (592) (468)
Exceptional items 5 (337) -
------------------------------------------------------ ---- -------- -------
Operating loss after
exceptional items (929) (468)
Finance costs (21) (78)
------------------------------------------------------ ---- -------- -------
Loss before taxation (950) (546)
Tax (expense)/credit (459) 931
------------------------------------------------------ ---- -------- -------
(Loss)/profit for the year from continuing operations (1,409) 385
------------------------------------------------------ ---- -------- -------
Discontinued operations
------------------------------------------------------ ---- -------- -------
Loss after tax for the year from discontinued
operations 6 (9,924) (2,489)
------------------------------------------------------ ---- -------- -------
Loss for the year (11,333) (2,104)
------------------------------------------------------ ---- -------- -------
Other comprehensive income/(losses) to
be reclassified to profit and loss
in subsequent periods
Exchange differences on translation
of foreign operations 10 (3)
Tax credit - 2
------------------------------------------------------ ---- -------- -------
Other comprehensive income/(losses)
for the year 10 (1)
------------------------------------------------------ ---- -------- -------
Total comprehensive losses
for the year (11,323) (2,105)
------------------------------------------------------ ---- -------- -------
Earnings per share (EPS)
Basic and diluted EPS on loss for the year 7 (6.2)p (1.2)p
------------------------------------------------------ ---- -------- -------
Earnings per share for continuing operations
------------------------------------------------------ ---- -------- -------
Basic and diluted EPS on (loss)/profit for the
year from continuing operations 7 (0.9)p 0.2p
------------------------------------------------------ ---- -------- -------
Consolidated Balance Sheet
as at 31 March 2022
As restated*
2022 2021
Note GBP'000 GBP'000
-------------------------------------------- ---- -------- ------------
ASSETS
Non-current assets
Intangibles 4,745 9,892
Property, plant and equipment 1,138 3,078
Right of use assets 106 1,801
Deferred taxation 1,107 2,535
-------------------------------------------- ---- -------- ------------
Total non-current assets 7,096 17,306
-------------------------------------------- ---- -------- ------------
Current assets
Inventories 1,094 2,238
Trade and other receivables 3,045 4,175
Cash and cash equivalents 1,605 5,827
-------------------------------------------- ---- -------- ------------
Total current assets 5,744 12,240
-------------------------------------------- ---- -------- ------------
Assets held for sale 6 4,995 -
-------------------------------------------- ---- -------- ------------
Total assets 17,835 29,546
-------------------------------------------- ---- -------- ------------
EQUITY AND LIABILITIES
Equity
Share capital 8,044 8,028
Share premium 25,340 25,288
Retained deficit (21,537) (9,891)
Translation reserve (31) (41)
Total equity 11,816 23,384
-------------------------------------------- ---- -------- ------------
Liabilities
Non-current liabilities
Long-term borrowings 51 712
Lease liabilities 23 1,753
Deferred income 2,500 647
-------------------------------------------- ---- -------- ------------
Total non-current liabilities 2,574 3,112
-------------------------------------------- ---- -------- ------------
Current liabilities
Short-term borrowings 204 206
Lease liabilities 92 172
Trade and other payables 2,674 2,672
-------------------------------------------- ---- -------- ------------
Total current liabilities 2,970 3,050
-------------------------------------------- ---- -------- ------------
Liabilities directly associated with assets
held for sale 6 475 -
-------------------------------------------- ---- -------- ------------
Total liabilities 6,019 6,162
-------------------------------------------- ---- -------- ------------
Total equity and liabilities 17,835 29,546
-------------------------------------------- ---- -------- ------------
* See note 3 for details regarding the restatement.
Consolidated Statement of Changes in Equity
for the year ended 31 March 2022
As restated*
Share Share Retained Translation As restated*
capital premium deficit reserve Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------- ---- ------- ------- ------------ ----------- ------------
Balance at 31 March 2020 as reported 6,752 15,258 (8,364) (38) 13,608
----------------------------------------------------- ---- ------- ------- ------------ ----------- ------------
Development costs written off 3 - - (290) - (290)
----------------------------------------------------- ---- ------- ------- ------------ ----------- ------------
Restated balance at 31 March 2020 6,752 15,258 (8,654) (38) 13,318
----------------------------------------------------- ---- ------- ------- ------------ ----------- ------------
Loss for year ended 31 March 2021 - - (2,104) - (2,104)
Other comprehensive losses - net exchange adjustments - - - (3) (3)
Other comprehensive income - tax credit - - 2 - 2
----------------------------------------------------- ---- ------- ------- ------------ ----------- ------------
Total comprehensive losses for the year - - (2,102) (3) (2,105)
Issue of share capital for cash consideration 1,276 10,581 - - 11,857
Expenses in connection with share issue - (551) - - (551)
Share-based payments - - 270 - 270
Deferred tax credit related to share-based payments - - 595 - 595
----------------------------------------------------- ---- ------- ------- ------------ ----------- ------------
Restated balance at 31 March 2021 8,028 25,288 (9,891) (41) 23,384
----------------------------------------------------- ---- ------- ------- ------------ ----------- ------------
Loss for year ended 31 March 2022 - - (11,333) - (11,333)
Other comprehensive income - net exchange adjustments - - - 10 10
Total comprehensive (losses)/income for the year - - (11,333) 10 (11,323)
Share options exercised 16 52 - - 68
Share-based payments - - 282 - 282
Deferred tax debit related to share-based payments - - (595) - (595)
Balance at 31 March 2022 8,044 25,340 (21,537) (31) 11,816
----------------------------------------------------- ---- ------- ------- ------------ ----------- ------------
* See note 3 for details regarding the restatement.
Consolidated Cash Flow Statement
for the year ended 31 March 2022
As restated*
2022 2021
Note GBP'000 GBP'000
--------------------------------------------------- ---- ------- ------------
Cash flows generated from operations
Loss for the year from continuing operations (1,409) 385
Loss for the year from discontinued operations (9,924) (2,489)
Adjustments for:
Gain on disposal of fixed assets (7) -
Loss on disposal of Alva site fixed assets 226 -
Depreciation 671 461
Amortisation of intangible assets 618 425
Impairment and derecognition of intangible
assets 47 -
Impairment loss recognised on the remeasurement
to fair value 6 1,915 -
Share-based payments 282 270
Taxation 833 (1,435)
Omega Diagnostic GmbH liability settlement (126) -
Finance costs 180 218
--------------------------------------------------- ---- ------- ------------
Cash outflow from operating activities before
working capital movement (6,694) (2,165)
Increase/(decrease) in trade and other receivables 1,130 (887)
Increase/(decrease) in inventories 480 (1,069)
(Increase)/decrease in trade and other payables (137) 1,072
Movement in grants (8) (8)
Receipt of advance funding from the DHSC 2,000 500
Taxation received - 138
--------------------------------------------------- ---- ------- ------------
Cash outflow from operating activities (3,229) (2,419)
--------------------------------------------------- ---- ------- ------------
Investing activities
Income from sale of property, plant and equipment 985 -
Purchase of property, plant and equipment (968) (1,965)
Purchase of intangible assets (510) (860)
--------------------------------------------------- ---- ------- ------------
Net cash used in investing activities (493) (2,825)
--------------------------------------------------- ---- ------- ------------
Financing activities
Finance costs (2) (29)
Proceeds from issue of share capital 68 11,857
Expenses in connection with share issue - (551)
New asset finance arrangements - 796
Repayment of overdraft facility - (565)
Principal portion of asset finance payments (198) (96)
Interest portion of asset finance payments (34) (13)
Principal portion of lease liability payments (192) (149)
Interest portion of lease liability payments (144) (176)
--------------------------------------------------- ---- ------- ------------
Net cash from financing activities (502) 11,074
--------------------------------------------------- ---- ------- ------------
Net increase in cash and cash equivalents (4,224) 5,830
Effects of exchange rate movements 2 (3)
Cash and cash equivalents at beginning of
year 5,827 -
--------------------------------------------------- ---- ------- ------------
Cash and cash equivalents at end of year 1,605 5,827
--------------------------------------------------- ---- ------- ------------
* See note 3 for details regarding the restatement.
Company Balance Sheet
as at 31 March 2022
As restated*
2022 2021
GBP'000 GBP'000
----------------------------- -------- ------------
ASSETS
Non-current assets
Investments 3,100 4,661
Intangibles - 31
Deferred tax - 1,070
Total non-current assets 3,100 5,762
------------------------------ -------- ------------
Current assets
Trade and other receivables 16,898 12,881
Cash and cash equivalents 1,045 5,543
------------------------------ -------- ------------
Total current assets 17,943 18,424
------------------------------ -------- ------------
Total assets 21,043 24,186
------------------------------ -------- ------------
EQUITY AND LIABILITIES
Equity
Share capital 8,416 8,400
Share premium 25,957 25,905
Retained deficit (13,727) (10,785)
------------------------------ -------- ------------
Total equity 20,646 23,520
------------------------------ -------- ------------
Liabilities
Current liabilities
Trade and other payables 397 666
------------------------------ -------- ------------
Total current liabilities 397 666
------------------------------ -------- ------------
Total liabilities 397 666
------------------------------ -------- ------------
Total equity and liabilities 21,043 24,186
------------------------------ -------- ------------
* See note 3 for details regarding the restatement.
As permitted by section 408 of the Companies Act 2006, no
separate statement of comprehensive income is presented for the
Company.
The Company loss in the year was GBP2,832,000 (2021: restated
profit of GBP374,000). Further details regarding the restatement of
2021 profit in the year are set out in Note 3.
Company Statement of Changes in Equity
for the year ended 31 March 2022
As restated*
Share Share Retained As restated*
capital premium deficit Total
Note GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------- ---- ------- ------- ------------ ------------
Balance at 31 March 2020 as reported 7,125 15,875 (11,393) 11,607
---------------------------------------------- ---- ------- ------- ------------ ------------
Restatement of 2019 profit for Omega
Diagnostics GmbH liability 3 - - (430) (430)
---------------------------------------------- ---- ------- ------- ------------ ------------
Restated balance at 31 March 2020 7,125 15,875 (11,823) 11,177
---------------------------------------------- ---- ------- ------- ------------ ------------
Profit for the year ended 31 March
2021 as reported - - 513 513
Restatement of 2021 profit for share-based
payments 3 - - (139) (139)
---------------------------------------------- ---- ------- ------- ------------ ------------
Profit for the year ended 31 March
2021 as restated - - 374 374)
Other comprehensive income - tax
credit - - 2 2
---------------------------------------------- ---- ------- ------- ------------ ------------
Total comprehensive income for the
year as restated - - 376 376
Issue of share capital for cash consideration 1,275 10,581 - 11,856
Expenses in connection with share
issue - (551) - (551)
Share-based payments as restated 3 - - 270 270
Deferred tax credit related to share-based
payments - - 392 392
---------------------------------------------- ---- ------- ------- ------------ ------------
Restated balance at 31 March 2021 8,400 25,905 (10,785) 23,520
---------------------------------------------- ---- ------- ------- ------------ ------------
Loss for the year ended 31 March
2022 - - (2,832) (2,832)
Share options exercised 16 52 - 68
Share-based payments - - 282 282
Deferred tax debit related to share-based
payments - - (392) (392)
Balance at 31 March 2022 8,416 25,957 (13,727) 20,646
---------------------------------------------- ---- ------- ------- ------------ ------------
* See note 3 for details regarding the restatement.
Company Cash Flow Statement
for the year ended 31 March 2022
As restated*
2022 2021
GBP'000 GBP'000
------------------------------------------------------ -------- ------------
Cash flows generated from operations
(Loss)/profit for the year (2,832) 374
Adjustments for:
Taxation 678 (376)
Impairment of subsidiaries 1,685 -
Share-based payments 158 131
Finance costs 31 28
------------------------------------------------------ -------- ------------
Cash (outflow)/inflow before working capital movement (280) 157
Increase in trade and other receivables excluding
intercompany financing (22) (15)
(Decrease)/increase in trade and other payables (269) 11
Cash (outflow)/inflow from operating activities (571) 153
------------------------------------------------------ -------- ------------
Investing activities
Intercompany transfer of intangible assets 31 -
Transfers of cash to subsidiary companies (19,806) (14,220)
Transfers of cash from subsidiary companies 15,811 9,327
Investment in subsidiaries - (105)
Net cash used in investing activities (3,964) (4,998)
------------------------------------------------------ -------- ------------
Financing activities
Finance costs (31) (28)
Proceeds from issue of share capital 68 11,856
Expenses of share issue - (551)
Repayment of overdraft facility - (889)
------------------------------------------------------ -------- ------------
Net cash inflow from financing activities 37 10,388
------------------------------------------------------ -------- ------------
Net (decrease)/increase in cash and cash equivalents (4,498) 5,543
Cash and cash equivalents at beginning of year 5,543 -
------------------------------------------------------ -------- ------------
Cash and cash equivalents at end of year 1,045 5,543
------------------------------------------------------ -------- ------------
* See note 3 for details regarding the restatement.
Notes to the Preliminary Announcement
for the year ended 31 March 2022
1 Basis of preparation
The financial information set out in this preliminary
announcement does not constitute statutory accounts as defined in
Section 434(3) of the Companies Act 2006.
The consolidated balance sheet at 31 March 2022 and the
consolidated statement of comprehensive income, consolidated cash
flow statement, consolidated statement of changes in equity and
associated notes for the year then ended have been extracted from
the Group's financial statements which were approved by the Board
of Directors on 11 September 2022 and are audited. The Independent
Auditor's Report will highlight a material uncertainty over going
concern due to the uncertain timing and quantum of the receipt of
deferred consideration from the sale of the CD4 business and the
potential for a settlement of the ongoing dispute with the DHSC.
The audit opinion is neither modified nor qualified in this
respect.
The statutory accounts for 2022 will be finalised on the basis
of the financial information presented in this preliminary
announcement and will be delivered to the Registrar of
Companies.
The consolidated financial statements have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006. The comparative
consolidated financial information for the year ended 31 March 2021
has been restated in accordance with Note 3.
2 Accounting policies
Prior year restatements
A number of adjustments have been made for figures reported in
prior years and these adjustments are set out in Note 3. In
addition, a number of reclassifications have been made to amounts
previously reported to ensure consistency of presentation between
reporting periods.
Discontinued operations
Assets and liabilities are classified as held for disposal if
their recoverable value is likely to be recovered via a sale or
distribution as opposed to continued use by the Group. In order to
be classified as assets held for sale, assets and liabilities must
meet all of the following conditions; the disposal is highly
probable, it is available for immediate disposal, it is being
actively marketed and the disposal is likely to occur within one
year.
Assets that qualify as held for disposal and related liabilities
are disclosed separately from other assets and liabilities in the
balance sheet prospectively from the date of classification.
Non-current assets determined as held for disposal are measured at
the lower of carrying value and fair value less costs to sell. No
depreciation or amortisation is charged in respect of these assets
after classification as held for disposal.
Assets or groups of assets and related liabilities that qualify
as held for disposal are classified as discontinued operations when
they represent a separate major line of business or geographical
area, are part of a single plan to dispose of a separate major line
of business or geographical area or are acquired exclusively with a
view to resale. Income and expenses relating to these discontinued
operations are disclosed in a single net amount after taxes in the
statement of comprehensive income, with comparative amounts
re-presented accordingly.
Additional disclosures are provided in Note 6. All other notes
to the financial statements include amounts for continuing
operations, unless indicated otherwise.
Basis of consolidation
The Group financial statements consolidate the financial
statements of Omega Diagnostics Group PLC and the entities it
controls (its subsidiaries). Control is achieved when the Group is
exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns
through its power over the investee. Subsidiaries are consolidated
from the date of acquisition, being the date on which the Group
obtains control, and continue to be consolidated until the date
that such control ceases. The financial statements of the
subsidiaries used in the preparation of the consolidated financial
statements are based on consistent accounting policies. All
intercompany balances and transactions, including unrealised
profits arising from them, are eliminated.
Going concern
In determining the appropriate basis of preparation of the
financial statements, the Directors are required to consider
whether the Company and Group can continue in operational existence
through a period of at least 12 months from the date of approving
the financial statements (the going concern period). The Directors
have determined that the going concern period for purposes of these
financial statements is the period through to 30 September 2023.
The Group realised a loss of GBP11.3 million for the year ended 31
March 2022 (2021: loss of GBP2.1 million). As at 31 March 2022, the
Group had net current assets of GBP2.8 million, including a cash
balance of GBP1.6 million and additionally had a overdraft facility
of GBP2.0 million, which was undrawn. Subsequent to the year end,
the overdraft facility was extended to 30 September 2022 on
existing terms but following the sale of the CD4 business in July,
Bank of Scotland have subsequently indicated it will not be renewed
beyond this date. At the date of finalising these financial
statements, the Group has cash in bank of GBP2.5 million.
The Group's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Strategic Report. The financial position of the
Group, its cash flows, liquidity position and borrowing facilities
are described in the Financial Review.
In May and June 2022, the Group raised GBP2.2 million from
shareholders through a placing and open offer/direct subscription,
in order to finance the loss-making CD4 business through to
eventual disposal. The sale of the CD4 business was concluded on 31
July 2022, with the Group subsequently receiving a cash payment of
GBP0.5 million for the sale of fixed assets and a further GBP0.9
million for inventory on hand. A further GBP4.0 million is expected
to be received, contingent on the successful outcome of an ongoing
clinical study in Kenya which is expected to conclude in the final
quarter of this calendar year. Royalty fees of 4% of Accubio's
future CD4 revenues for the period to 31 December 2026 would also
be due to be received, up to GBP1.0 million in aggregate.
The Directors have prepared trading and cash flow base case
forecasts to 30 September 2023, taking into account the full
anticipated proceeds from the sale of the CD4 business and have
applied severe downside sensitivities and reverse stress tests to
the base case forecasts. The sensitivities and stress tests have
been applied to take account of the impact of potential uncertain
outcomes that are, to an extent, outside of management's control,
as well as reduced trading forecasts, taking into account current
macro-economic conditions. These scenarios include:
-- Not receiving any of the deferred consideration of GBP4.0
million arising from the sale of the CD4 business. This would
require the VISITECT(R) CD4 test to fail to meet the agreed levels
of sensitivity and specificity, the Group's response to the points
raised in the study report to be dismissed and the World Health
Organisation to officially de-list the product, removing it from
the market entirely. The Directors consider that this final step
will not be taken lightly as the test is unique. Should the product
be de-listed, an evaluation of the time and costs associated with
any remedial action is to be agreed between the Group and Accubio
Limited, with the costs of any such action to be met from the
deferred consideration held in escrow, subject to a maximum cap of
GBP4.0 million. There is therefore a range of potential outcomes
arising from the Kenyan trial, ranging from a cash receipt of
GBP4.0 million to GBPnil, and the timing and quantum is, to an
extent, outside of management's control.
-- Reduction in forecast revenue to GBP8.5 million per annum, in
line with the year ended 31 March 2022, together with a 2%
reduction in gross margin to 58%.
-- After factoring the impact of the above sensitivities, the
Directors considered certain discretionary cost mitigation measures
which could be taken, including eliminating any new headcount,
delaying the planned investments in product menu expansion and in
establishing a US presence, further delaying the start of the lease
for the new Ely premises and seeking recovery of liquidated damages
in cash or through the benefit of a rent-free period. The severe
downside forecast takes account of all of these mitigating actions
that could be taken as needed, but does not include any new debt
finance facilities which may be available to the Group. The
Directors consider these mitigating actions to be under their
direct control.
-- After taking into account the above sensitivities and
mitigating actions, the reverse stress test indicates revenue could
fall by a further 38% and a gross margin could deteriorate by an
additional 2% before forecast cash resources are exhausted.
After taking legal advice and making an assessment of the terms
and conditions contained within the contract with the DHSC, the
Directors do not believe the Group will be required to repay the
pre-production payment of GBP2.5 million. In addition, the
Directors consider there to be grounds to claim for damages for
additional losses incurred under the contract. As such, the
Directors believe there is a reasonable prospect that no cash
outflow in the form of a repayment to the DHSC and repayment is not
included in the base case or as a sensitivity. However, the
Director's acknowledge that there is a risk that a repayment of
some or all of this amount may be required, the timing and quantum
of which is uncertain.
The receipt of the CD4 sale proceeds of GBP4.0 million is
dependent on the outcome of an ongoing, independent clinical study.
Although the Directors are confident of a positive outcome from the
trial and the receipt of the full amount of the deferred
consideration, the precise timing and quantum is uncertain.
The Directors acknowledge there is an element of uncertainty
within the going concern period attaching to the outcome of the
DHSC dispute and the receipt of the CD4 deferred consideration. If
both outstanding matters went against the Group to the maximum
extent of GBP6.5 million, this may exhaust the available liquidity
of the Company and Group and represents a material uncertainty
which may cast significant doubt on the Company and Group's ability
to continue as a going concern. Notwithstanding this material
uncertainty, on the basis of the legal advice received in relation
to the DHSC dispute, and our assessment that the conditions
precedent prior to release of the CD4 contingent consideration will
be achieved, the Board has a reasonable expectation that the
Company and Group have adequate resources to continue in
operational existence for the period to 30 September 2023. On this
basis, the Directors continue to adopt the going concern basis of
preparation. Accordingly, these financial statements do not include
the adjustments that would be required if the Company and Group was
unable to continue as a going concern.
3 Restatement of comparatives
Group
Intangible assets
Following a review of intangible assets, one project has been
identified which was not adequately defined in previous reporting
periods and which does not meet the requirements of IAS 38, in that
the probability of generating future economic benefits arising from
the development expenditure cannot be established. The capitalised
costs relating to this project are GBP235,000, all of which were
incurred prior to 1 April 2020 and were incorrectly capitalised at
the time.
In addition, a legacy research and development project valued at
GBP55,000 has been identified which relates to the Group's
infectious disease business, which was sold in June 2018. This
amount was incorrectly not written off in the year ended 31 March
2019.
The costs associated with both of these projects have been
written off effective 31 March 2020 through means of a prior year
adjustment in accordance with the requirements of IAS 8, resulting
in a reduction of the carrying value of intangible assets of
GBP290,000 as at that date. There has been no impact on the
earnings reported for the years ended 31 March 2021 or 2020.
Deferred tax
Historically, deferred tax assets and liabilities were
incorrectly reported as separate balances in prior years. The 31
March 2021 balance sheet has been restated to net off the deferred
tax asset and liability, reducing the previously reported deferred
tax asset by GBP1,153,000 with a corresponding reduction in the
deferred tax liability. The 31 March 2020 balance sheet has been
restated net off the deferred tax liability asset and liability,
reducing the previously reported deferred tax asset by GBP899,000
with a corresponding reduction in the deferred tax liability.
Deferred income
In the year ended 31 March 2021 the prepayment of GBP500,000
from the DHSC was incorrectly presented within trade and other
payables. This amount has been reclassified as deferred income in
the balance sheet as at 31 March 2021 with a corresponding
reduction in trade and other payables. The presentation of the
consolidated cash flow statement has also been restated. There is
no impact to the consolidated statement of comprehensive
income.
The effect of the restatements noted above on the consolidated
balance sheet as at 31 March 2021 is as follows:
As reported Restatement As restated
2021 2021 2021
GBP'000 GBP'000 GBP'000
------------------------------ ----------- ----------- -----------
ASSETS
Non-current assets
Intangibles 10,182 (290) 9,892
Property, plant and equipment 3,078 - 3,078
Right of use assets 1,801 - 1,801
Deferred taxation 3,688 (1,153) 2,535
------------------------------ ----------- ----------- -----------
Total non-current assets 18,749 (1,443) 17,306
------------------------------ ----------- ----------- -----------
Current assets
Inventories 2,238 - 2,238
Trade and other receivables 4,175 - 4,175
Cash and cash equivalents 5,827 - 5,827
------------------------------ ----------- ----------- -----------
Total current assets 12,240 - 12,240
------------------------------ ----------- ----------- -----------
Total assets 30,989 (1,443) 29,546
------------------------------ ----------- ----------- -----------
EQUITY AND LIABILITIES
Equity
Issued capital 33,316 - 33,316
Retained deficit (9,601) (290) (9,891)
Translation reserve (41) - (41)
------------------------------ ----------- ----------- -----------
Total equity 23,674 (290) 23,384
------------------------------ ----------- ----------- -----------
Liabilities
Non-current liabilities
Long-term borrowings 712 - 712
Lease liabilities 1,753 - 1,753
Deferred tax 1,153 (1,153) -
Deferred income 147 500 647
------------------------------ ----------- ----------- -----------
Total non-current liabilities 3,765 (653) 3,112
------------------------------ ----------- ----------- -----------
Current liabilities
Short-term borrowings 206 - 206
Lease liabilities 172 - 172
Trade and other payables 3,172 (500) 2,672
------------------------------ ----------- ----------- -----------
Total current liabilities 3,550 (500) 3,050
------------------------------ ----------- ----------- -----------
Total liabilities 7,315 (1,153) 6,162
------------------------------ ----------- ----------- -----------
Total equity and liabilities 30,989 (1,443) 29,546
------------------------------ ----------- ----------- -----------
The effect of the restatements noted above on the consolidated
cash flow statements as at 31 March 2021 is as follows:
As reported Restatement As restated
2021 2021 2021
GBP'000 GBP'000 GBP'000
------------------------------------- ----------- ----------- -----------
Increase in trade and other payables 1,572 (500) 1,072
Receipt of advance funding from
DHSE - 500 500
------------------------------------- ----------- ----------- -----------
The effect of the restatements noted above on the consolidated
balance sheet as at 31 March 2020 is as follows:
As reported Restatement As restated
2020 2020 2020
GBP'000 GBP'000 GBP'000
------------------------------ ----------- ----------- -----------
ASSETS
Non-current assets
Intangibles 9,677 (290) 9,387
Property, plant and equipment 1,432 - 1,432
Right of use assets 1,732 - 1,732
Deferred taxation 1,538 (899) 639
------------------------------ ----------- ----------- -----------
Total non-current assets 14,379 (1,189) 13,190
------------------------------ ----------- ----------- -----------
Current assets
Inventories 1,169 - 1,169
Trade and other receivables 3,288 - 3,288
Cash and cash equivalents - - -
------------------------------ ----------- ----------- -----------
Total current assets 4,457 - 4,457
------------------------------ ----------- ----------- -----------
Total assets 18,836 (1,189) 17,647
------------------------------ ----------- ----------- -----------
EQUITY AND LIABILITIES
Equity
Issued capital 22,011 - 22,011
Retained deficit (8,364) (290) (8,654)
Translation reserve (38) - (38)
------------------------------ ----------- ----------- -----------
Total equity 13,609 (290) 13,319
------------------------------ ----------- ----------- -----------
Liabilities
Non-current liabilities
Long-term borrowings 131 - 131
Lease liabilities 1,704 - 1,704
Deferred tax 899 (899) -
Deferred income 155 - 155
------------------------------ ----------- ----------- -----------
Total non-current liabilities 2,889 (899) 1,990
------------------------------ ----------- ----------- -----------
Current liabilities
Short-term borrowings 86 - 86
Lease liabilities 87 - 87
Bank overdraft 565 - 565
Trade and other payables 1,600 - 1,600
------------------------------ ----------- ----------- -----------
Total current liabilities 2,338 - 2,338
------------------------------ ----------- ----------- -----------
Total liabilities 5,227 (899) 4,328
------------------------------ ----------- ----------- -----------
Total equity and liabilities 18,836 (1,189) 17,647
------------------------------ ----------- ----------- -----------
Company
Omega Diagnostics GmbH settlement
The EUR500,000 (GBP430,000) liability associated with the
liquidation of Omega Diagnostics GmbH was reported in the financial
statements of the Group for the year ended 31 March 2019. Whilst
the liability was correctly reflected in the Group financial
statements, the liability was the legal responsibility of Omega
Diagnostics Group PLC and should also have been reflected in the
Company's balance sheet as at 31 March 2021, 31 March 2020 and 31
March 2019. These balances have restated to include the liability
of GBP430,000, with a corresponding increase in the Company's total
opening retained earnings deficit. This liability was settled for
EUR350,000 (GBP304,000) in August 2021 with a corresponding
exceptional gain of GBP126,000 included within discontinued
activities in the both the Group statement of comprehensive income
for the year ended 31 March 2022 and the Company's loss for the
year ended 31 March 2022.
The effects of the restatements noted above on the Company
balance sheet as at 31 March 2021 and 31 March 2020 are as
follows:
As reported Restatement As restated
2021 2021 2021
GBP'000 GBP'000 GBP'000
-------------------------- ----------- ----------- -----------
Retained deficit (10,355) (430) (10,785)
Total equity 23,950 (430) 23,520
Trade and other payable (236) (430) (666)
Total current liabilities (236) (430) (666)
Total liabilities (236) (430) (666)
-------------------------- ----------- ----------- -----------
As reported Restatement As restated
2020 2020 2020
GBP'000 GBP'000 GBP'000
-------------------------- ----------- ----------- -----------
Retained deficit (11,393) (430) (11,823)
Total equity 11,607 (430) 11,177
Trade and other payable 226 430 656
Total current liabilities 1,115 430 1,545
Total liabilities 1,115 430 1,545
-------------------------- ----------- ----------- -----------
Share-based payment expense
The Company's share-based payment expense of GBP139,000 for the
year ended 31 March 2021 in respect of employees of the subsidiary
company Omega Diagnostics Limited was incorrectly credited through
comprehensive income for the year instead of being recorded through
share-based payment reserves included within retained deficit. The
Company's 2021 results have been restated to reverse the incorrect
credit to comprehensive income resulting in a reduction in the
Company only profit for the year ended 31 March 2021 of GBP139,000
with the offset being recorded through the "share-based payments"
line within retained deficit. There is no change to the Company's
total retained deficit or net assets as at 31 March 2021.
As reported Restatement As restated
31 March 2021 31 March 2021
GBP'000 GBP'000 GBP'000
------------------- ------------- ----------- -------------
Company profit for
the year 513 (139) 374
4 Segmental information
Following the withdrawal from COVID-19 products and the decision
taken in March 2022 to dispose of the CD4 business, the sale of
which was completed on 31 July 2022, the entire Global Health
division was classified as held for sale, the only remaining
division is Health and Nutrition. The Global Health division
specialised in the research, development, production and marketing
of kits to aid the diagnosis of infectious diseases, including
COVID-19.
The Health and Nutrition division specialises in the research,
development and production of kits to aid the detection of immune
reactions to food. It also provides clinical analysis to the
general public, clinics and health professionals as well as
supplying the point-of-care Food Detective(R) test.
The Corporate segment consists of centralised corporate costs
which are not allocated to the trading activities of the Group.
Inter-segment transfers or transactions are entered into under
the normal commercial conditions that would be available to
unrelated third parties.
Business segment information
Health
and
Nutrition Corporate Total
2022 GBP'000 GBP'000 GBP'000
------------------------------------------- --------- --------- -------
Revenue 8,779 - 8,779
Inter-segment revenue (240) - (240)
------------------------------------------- --------- --------- -------
Total revenue 8,539 - 8,539
Cost of sales (3,437) - (3,437)
------------------------------------------- --------- --------- -------
Gross profit 5,102 - 5,102
Operating costs (4,137) (1,557) (5,694)
------------------------------------------- --------- --------- -------
Operating profit/(loss) before exceptional
items 965 (1,557) (592)
Exceptional items - (337) (337)
------------------------------------------- --------- --------- -------
Operating profit/(loss) after exceptional
items 965 (1,894) (929)
Depreciation 194 - 194
Amortisation 353 - 353
------------------------------------------- --------- --------- -------
EBITDA 1,512 (1,894) (382)
------------------------------------------- --------- --------- -------
Exceptional items - 337 337
Share-based payment charges 58 158 216
------------------------------------------- --------- --------- -------
Adjusted EBITDA 1,570 (1,399) 171
Share-based payment charges (58) (158) (216)
Depreciation (194) - (194)
Amortisation (353) - (353)
Net finance costs (21) - (21)
Exceptional costs - (337) (337)
------------------------------------------- --------- --------- -------
Profit/(loss) before tax 944 (1,894) (950)
Exceptional items - 337 337
Share-based payment charges 58 158 216
Amortisation 99 - 99
------------------------------------------- --------- --------- -------
Adjusted profit/(loss) before tax 1,101 (1,399) (298)
------------------------------------------- --------- --------- -------
Health
and
Nutrition Corporate Total
2021 GBP'000 GBP GBP
------------------------------------------- --------- --------- -------
Revenue 6,937 - 6,937
Inter-segment revenue (121) - (121)
------------------------------------------- --------- --------- -------
Total revenue 6,816 - 6,816
Cost of sales (2,820) - (2,820)
------------------------------------------- --------- --------- -------
Gross profit 3,996 - 3,996
Operating costs (3,090) (1,374) (4,464)
------------------------------------------- --------- --------- -------
Operating profit/(loss) before exceptional
items 906 (1,374) (468)
Exceptional items - - -
------------------------------------------- --------- --------- -------
Operating profit/(loss) after exceptional
items 906 (1,374) (468)
Depreciation 179 - 179
Amortisation 178 - 178
------------------------------------------- --------- --------- -------
EBITDA 1,263 (1,374) (111)
------------------------------------------- --------- --------- -------
Share-based payment charges 72 131 203
------------------------------------------- --------- --------- -------
Adjusted EBITDA 1,335 (1,243) 92
Share-based payment charges (72) (131) (203)
Depreciation (179) - (179)
Amortisation (178) - (178)
Net finance costs (50) (28) (78)
------------------------------------------- --------- --------- -------
Profit/(loss) before tax 856 (1,402) (546)
Share-based payment charges 72 131 203
Amortisation 108 - 108
------------------------------------------- --------- --------- -------
Adjusted profit/(loss) before tax 1,036 (1,271) (235)
------------------------------------------- --------- --------- -------
The adjusted profit/(loss) before taxation is a key measure of
the Group's trading performance used by the Directors. The reported
numbers are non-GAAP measures.
Corporate consists of centralised corporate costs which are not
allocated across the trading divisions.
The segment assets and liabilities are as follows:
Health
and
Nutrition Corporate Total
2022 GBP'000 GBP'000 GBP'000
------------------------ --------- --------- -------
Segment assets 10,055 73 10,128
Unallocated assets - - 2,712
------------------------ --------- --------- -------
Total assets 10,055 73 12,840
------------------------ --------- --------- -------
Segment liabilities 2,508 397 2,905
Unallocated liabilities - - 2,639
------------------------ --------- --------- -------
Total liabilities 2,508 397 5,544
------------------------ --------- --------- -------
The assets and liabilities held for sale at 31 March 2022 are
detailed in Note 6 - discontinued operations.
As restated*
Health As restated*
and As restated*
Global
Nutrition Health Corporate Total
2021 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------------ ------------ --------- ------------
Segment assets 9,890 11,243 51 21,184
Unallocated assets - - - 8,362
------------------------ ------------ ------------ --------- ------------
Total assets 9,890 11,243 51 29,546
------------------------ ------------ ------------ --------- ------------
Segment liabilities 1,201 4,295 666 6,162
Unallocated liabilities - - - -
------------------------ ------------ ------------ --------- ------------
Total liabilities 1,201 4,295 666 6,162
------------------------ ------------ ------------ --------- ------------
* See note 3 for details regarding the restatement.
Unallocated assets comprise cash and deferred taxation.
Unallocated liabilities primarily relate to deferred income
balances.
Information about major customers
One customer within the Health and Nutrition segment accounts
for GBP1,369,000, 16.0% (2021: GBP1,336,000, 19.6%) of continuing
revenues.
Geographical information
The Group's geographical information is based on the location of
its markets and customers. Sales to external customers disclosed in
the geographical information are based on the geographical location
of its customers. The analysis of segment assets and capital
expenditure is based on the geographical location of the
assets.
2022 2021
GBP GBP
--------------------------- ----- -----
Revenues
UK 470 402
Rest of Europe 2,605 1,777
North America 1,742 842
South/Central America 500 269
India 513 293
Asia and the Far East 1,503 2,592
Africa and the Middle East 1,206 641
--------------------------- ----- -----
8,539 6,816
--------------------------- ----- -----
Property, Trade
plant and and other
Intangibles equipment Inventories receivables Total
2022 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ----------- --------- ----------- ----------- -------
Assets
UK 4,743 1,241 1,084 2,938 10,006
India 2 3 10 107 122
Unallocated assets - - - - 2,712
------------------- ----------- --------- ----------- ----------- -------
Total assets 4,745 1,244 1,094 3,045 12,840
------------------- ----------- --------- ----------- ----------- -------
Property, Trade
plant and and other
Intangibles equipment Inventories receivables Total
2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ----------- --------- ----------- ----------- -------
Assets
UK 9,890 4,871 2,165 4,092 21,018
India 2 8 73 83 166
Unallocated assets - - - - 8,362
------------------- ----------- --------- ----------- ----------- -------
Total assets 9,892 4,879 2,238 4,175 29,546
------------------- ----------- --------- ----------- ----------- -------
2022 2021
GBP'000 GBP'000
------------------------ ------- -------
Liabilities
UK 2,829 3,230
India 76 89
Unallocated liabilities 2,639 2,843
------------------------ ------- -------
Total liabilities 5,544 6,162
------------------------ ------- -------
Capital expenditure
Health and Nutrition 275 142
Global Health and Other 693 1,823
----------------------------- --- -----
Total capital expenditure 968 1,965
----------------------------- --- -----
Intangible expenditure
Health and Nutrition 92 371
Global Health and Other 489 559
----------------------------- --- -----
Total intangible expenditure 581 930
----------------------------- --- -----
5 Exceptional items
2022 2021
Continuing Continuing
operations operations
GBP'000 GBP'000
-------------------------------- ---------- ----------
Compensation for loss of office (287) -
Aborted placing costs (50) -
-------------------------------- ---------- ----------
Total (337) -
-------------------------------- ---------- ----------
6 Discontinued operations
Following the withdrawal from COVID-19 products and the decision
taken in March 2022 to dispose of the CD4 business, the sale of
which was completed on 31 July 2022, the entire Global Health
division was classified as held for sale as part of a single
coordinated plan and has therefore been presented as a discontinued
operation .
The Alva manufacturing site was disposed of in March 2022 for
GBP985,000 resulting in a loss on disposal of GBP226,000 before
costs of GBP173,000. In addition, the remaining 14 years of the
Alva lease were assigned to the acquiror, and 93 employees were
transferred to Accubio Limited. The Group made a gain of GBP158,000
when disposing of the Alva right of use asset and associated lease
liability.
The remaining Global Health assets, including the CD4 assets,
were held for sale as at 31 March 2022 and an impairment loss of
GBP1,915,000 has been recognised on the remeasurement to fair
value, less costs to sell. The non-CD4 assets relate primarily to
COVID-19 plant and equipment no longer used in the business, the
liabilities relate to the hire purchase on these assets.
2022 2021
GBP'000 GBP'000
----------------------------------------------------- ------- -------
Revenue 3,789 1,919
Cost of sales (4,773) (1,456)
----------------------------------------------------- ------- -------
Gross (loss)/profit (984) 463
----------------------------------------------------- ------- -------
Administration costs (4,832) (2,964)
----------------------------------------------------- ------- -------
Selling and marketing costs (640) (499)
----------------------------------------------------- ------- -------
Other income 8 147
----------------------------------------------------- ------- -------
Operating loss before exceptional items (6,448) (2,853)
----------------------------------------------------- ------- -------
Exceptional items (1,028) -
----------------------------------------------------- ------- -------
Operating loss after exceptional items (7,476) (2,853)
----------------------------------------------------- ------- -------
Finance costs (159) (140)
----------------------------------------------------- ------- -------
Impairment loss recognised on the remeasurement
to fair value less costs to sell (1,915) -
----------------------------------------------------- ------- -------
Loss before taxation (9,550) (2,993)
----------------------------------------------------- ------- -------
Tax benefit/(expense):
----------------------------------------------------- ------- -------
Related to pre-tax loss from the ordinary activities
for the period (738) 504
----------------------------------------------------- ------- -------
Related to measurement to fair value less costs
to sell 364 -
----------------------------------------------------- ------- -------
Loss for the year from discontinued activities (9,924) (2,489)
----------------------------------------------------- ------- -------
Adjusted loss before taxation
2022 2021
GBP'000 GBP'000
-------------------------------------------------------- ------- -------
Loss for the year from discontinued activities (9,924) (2,489)
Exceptional items 1,028 -
-------------------------------------------------------- ------- -------
Impairment loss recognised on the remeasurement
to fair value less costs to sell 1,915 -
-------------------------------------------------------- ------- -------
Amortisation of intangible assets 6 11
-------------------------------------------------------- ------- -------
Share-based payment charges 66 67
-------------------------------------------------------- ------- -------
Adjusted loss for the year from discontinued activities (6,909) (2,411)
-------------------------------------------------------- ------- -------
Earnings per share 2022 2021
--------------------------------------------------------- ------ ------
Basic, loss for the year from discontinued operations (5.4p) (1.4p)
Diluted, loss for the year from discontinued operations (5.4p) (1.4p)
Adjusted, loss for the year from discontinued operations (3.8p) (1.4p)
--------------------------------------------------------- ------ ------
The net cash flows relating to the Global Health business are,
as follows:
2022 2021
GBP'000 GBP'000
-------------------------- ------- -------
Operating (4,064) (3,699)
Investing (126) (2,382)
Financing (412) (266)
-------------------------- ------- -------
Net cash inflow/(outflow) (4,602) (6,347)
-------------------------- ------- -------
The major classes of assets and liabilities of the Global Health
business as held for sale as at 31 March 2022 are, as follows:
Held for
sale
CD4 assets GBP'000
Intangible assets 3,784
Property, plant and equipment 395
Right of use assets 9
Inventories 664
-------------------------------------- --------
CD4 assets held for sale 4,852
Non CD4 assets
Intangible assets -
Property, plant and equipment 143
-------------------------------------- --------
Non CD4 assets held for sale 143
Total assets held for sale 4,995
CD4 liabilities
Lease liabilities (10)
-------------------------------------- --------
Non CD4 liabilities
Borrowings (465)
Total liabilities directly associated
with the assets held for sale (475)
-------------------------------------- --------
Net assets directly associated
with the disposal group 4,520
-------------------------------------- --------
The assets held for sale are stated net of the cost of
disposal.
Exceptional items summary
2022 2021
GBP'000 GBP'000
-------------------------------------- ------- -------
Loss on disposal of the Alva site (399) -
Gain on disposal of Alva lease 158 -
Impairment of Global Health inventory (723) -
Bad debt provision (190) -
Reduction in Omega Diagnostics GmbH
settlement* 126 -
-------------------------------------- ------- -------
Total (1,028) -
-------------------------------------- ------- -------
*relates to the German business which was discontinued in the
year ended 31 March 2019
7 Earnings per share
Basic earnings per share are calculated by dividing the
(loss)/profit for the year attributable to ordinary equity holders
of the Group by the weighted average number of ordinary shares
outstanding during the year.
Diluted earnings per share are calculated by dividing the
(loss)/profit attributable to ordinary equity holders of the Group
by the weighted average number of ordinary shares outstanding
during the year plus the weighted average number of ordinary shares
that would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares. Diluting events are
excluded from the calculation when the average market price of
ordinary shares is lower than the exercise price.
2022 2021
GBP'000' GBP'000'
------------------------------------------------- -------- --------
(Loss)/profit attributable to equity holders of
the Group
------------------------------------------------- -------- --------
Continuing operations (1,409) 385
------------------------------------------------- -------- --------
Discontinued operations (9,924) (2,489)
------------------------------------------------- -------- --------
Loss attributable to equity holders of the Group
for basic earnings (11,333) (2,104)
------------------------------------------------- -------- --------
2022 2021
Number Number
------------------------------------------ ----------- -----------
Basic average number of shares 182,638,427 171,688,730
Share options 4,359,653 5,415,449
------------------------------------------ ----------- -----------
Diluted weighted average number of shares 186,998,080 177,104,179
------------------------------------------ ----------- -----------
Adjusted earnings per share on profit for the year
The Group presents adjusted earnings per share, which are
calculated by taking adjusted (loss)/profit before taxation and
adding the tax credit or deducting the tax charge in order to allow
shareholders to understand better the elements of financial
performance in the year, so as to facilitate comparison with prior
periods and to better assess trends in financial performance.
2022 2021
GBP'000 GBP'000
------------------------------------------------- -------- -------
Loss attributable to equity holders of the Group (11,333) (2,104)
Exceptional items* 3,280 -
------------------------------------------------- -------- -------
Amortisation of intangible assets 105 120
------------------------------------------------- -------- -------
Share-based payment charges 282 270
------------------------------------------------- -------- -------
Adjusted loss attributable to equity holders of
the Group (7,666) (1,714)
------------------------------------------------- -------- -------
*being the sum of continuing exceptional items, discontinuing
exceptional items and impairment loss recognised on the
remeasurement to fair value less costs to sell.
Adjusted loss for the year - continuing operations
The reported numbers are non-GAAP measures.
2022 2021
GBP'000 GBP'000
------------------------------------------------------ ------- -------
(Loss)/profit for the year from continuing operations (1,409) 385
Exceptional items 337 -
------------------------------------------------------ ------- -------
Amortisation of intangible assets 99 109
------------------------------------------------------ ------- -------
Share-based payment charges 216 203
------------------------------------------------------ ------- -------
Adjusted (loss)/profit for the year from continuing
operations (757) 697
------------------------------------------------------ ------- -------
Adjusted EPS on loss for the year (4.2)p (1.0)p
------------------------------------------------- ------ ------
Adjusted EPS on (loss)/profit for the year from
continuing operations (0.4)p 0.4p
------------------------------------------------- ------ ------
Adjusted (loss)/profit before taxation, which is a key measure
of the Group's trading performance used by the Directors, is
derived by taking statutory profit before taxation and adding back
exceptional items, amortisation of intangible assets (excluding
development costs) and share-based payment charges.
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END
FR SFEFAFEESEFU
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September 12, 2022 02:01 ET (06:01 GMT)
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